In today’s rapidly evolving and fiercely competitive business landscape, it is crucial for investors and industry analysts to conduct comprehensive company evaluations. This article undertakes an in-depth industry comparison, assessing Tesla alongside its primary competitors in the Automobiles industry.
Tesla Background
Tesla is a vertically integrated battery electric vehicle automaker and developer of real-world artificial intelligence software, including autonomous driving and humanoid robots. The company has multiple vehicles in its fleet, which include luxury and mid-size sedans, crossover SUVs, a light truck, and a semi-truck. Tesla also plans to begin selling a sports car and offer a robotaxi service. Global deliveries in 2024 were a little below 1.8 million vehicles. The company sells batteries for stationary storage for residential and commercial properties, including utilities and solar panels, and solar roofs for energy generation. Tesla also owns a fast-charging network and an auto insurance business.
Industry Comparison
The following table highlights key financial indicators for Tesla and its competitors:
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Tesla Inc | 301.72 | 18.19 | 16.12 | 1.75% | $3.66 | $5.05 | 11.57% |
| Toyota Motor Corp | 10.38 | 1.28 | 0.97 | 2.54% | $1824.36 | $1968.84 | 8.15% |
| General Motors Co | 15.42 | 1.14 | 0.43 | 1.95% | $5.74 | $3.11 | -0.34% |
| Ferrari NV | 33.16 | 13.97 | 7.51 | 10.42% | $0.67 | $0.88 | 7.4% |
| Ford Motor Co | 11.62 | 1.14 | 0.29 | 5.29% | $3.67 | $4.3 | 9.39% |
| Li Auto Inc | 14.80 | 1.57 | 0.84 | -0.86% | -$0.71 | $4.47 | -36.17% |
| Thor Industries Inc | 21.74 | 1.41 | 0.62 | 0.5% | $0.11 | $0.32 | 11.5% |
| Winnebago Industries Inc | 37.34 | 1.09 | 0.47 | 0.45% | $0.03 | $0.09 | 12.32% |
| Workhorse Group Inc | 0.07 | 1.42 | 0.33 | -28.77% | -$0.01 | -$0.01 | -4.97% |
| Average | 18.07 | 2.88 | 1.43 | -1.06% | $229.23 | $247.75 | 0.91% |
Trends and Insights
After examining Tesla, the following trends can be inferred:
- The current Price to Earnings ratio of 301.72 is 16.7x higher than the industry average, indicating the stock is priced at a premium level according to market sentiment.
- It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 18.19, which exceeds the industry average by 6.32x.
- With a relatively high Price to Sales ratio of 16.12, which is 11.27x the industry average, the stock might be considered overvalued based on sales performance.
- The company has a higher Return on Equity (ROE) of 1.75%, which is 2.81% above the industry average, suggesting efficient use of equity to generate profits and demonstrating profitability and growth potential.
- Compared to its industry, the company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $3.66 Billion, which is 0.02x below the industry average, potentially indicating lower profitability or financial challenges.
- With lower gross profit of $5.05 Billion, which indicates 0.02x below the industry average, the company may experience lower revenue after accounting for production costs.
- With a revenue growth of 11.57%, which surpasses the industry average of 0.91%, the company is demonstrating robust sales expansion and gaining market share.
Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio is a key indicator of a company’s financial health and its reliance on debt financing. When examining Tesla in comparison to its top peers with respect to the Debt-to-Equity ratio, the following information becomes apparent:
- Compared to its top peers, Tesla has a stronger financial position indicated by its lower debt-to-equity ratio of 0.17.
- This suggests that the company relies less on debt financing and has a more favorable balance between debt and equity, which can be seen as a positive attribute by investors.
Key Takeaways
The high PE, PB, and PS ratios suggest that Tesla is relatively overvalued compared to its peers in the Automobiles industry. On the other hand, the high ROE and revenue growth indicate strong profitability and potential for future growth. However, the low EBITDA and gross profit figures may raise concerns about Tesla’s operational efficiency and financial health within the industry sector.